According to recent research, the number of companies moving overseas because of “access to qualified personnel” increased 75 percent over the previous two years. No surprise given the crunch for key talent in many established markets and the common practice of leveraging wage arbitrage in global markets (which can yield significant cost savings if done correctly). With global growth inversion occurring in secondary and emerging markets, the need to manage resourcing on a global basis has never been greater.
Yet the challenges of going global have also never been greater. Labor regulations are changing at alarming rates, and increasing social bifurcation (i.e. the divide between the “haves” and the “have nots”) will make them more challenging to manage in the future. Economic conditions vary tremendously from market to market. Add to that the dramatic differences in cultures, social conditions, market maturities, and political unrest – it’s a minefield to navigate. And I haven’t even addressed the issue of talent availability today and in the future, particularly in countries where the educational system has not been structured to sustain the output necessary to meet demand.
Here are a few examples of where these factors collide to create labor markets that are a challenge to interpret, from the TAPFIN Contingent Workforce Index:
- Four out of the top five markets for contingent worker availability are in the Asia Pacific region – China, India, Vietnam and Korea. While contingent workers and cost efficiencies are plentiful, productivity ratings are low and labor regulations tend to be more restrictive.
- Honduras and Guatemala rank low in terms of relative cost of contingent labor, and therefore have high cost efficiency. However, while labor cost is attractive, workforce availability is low, productivity levels are moderate and the regulatory environments are drastically different, with Honduras being highly restricted and Guatemala being relatively flexible.
- Because of limited regulations and high productivity, the United States actually ranks as a more favorable market for contingent labor than others countries in the Americas with more workforce availability like Canada, Argentina, Brazil and Mexico. Yet the perception of many is the opposite.
As these facts underscore, global expansion is complex. An executive I once worked with had a simple yet provoking strategy for taking a business global. He called it the “kicking and screaming strategy” – you would only take a business in to a new global market when a customer forced you to do so…kicking and screaming. Sage advice from a leader with the scars to prove his experience and wisdom must be heeded.
However, times have changed and we’re operating in an ever-increasing global marketplace. Companies that were once domestic are now huge global players.
Yet, to be successful, they need a better way to overcome challenges, leverage the global talent community and manage resources in a more strategic way. I believe global talent management starts with information and knowledge turning that into wisdom which can be acted upon in an effective way.
We live in a world full of information. With the rise of Big Data, we have never had access to more information to inform our labor decisions than we do today. Our clients are clamoring for that information. More important, I believe they are looking to our industry to lead them to the right answers – to help them navigate this difficult terrain and chart a path to success.
At a time when specialized talent is scarce and one-size-fits-all recruiting strategies are no longer sufficient to attract the world’s best talent, businesses need to analyze and act upon Big Data to determine the best markets from which to source talent. This is not an easy task and one which we in the staffing industry are working to alleviate. Where one company may focus on lowering costs, another may need a large supply of workers in a short space of time, and a third may need to prioritize both equally.
We’ve had these discussions with clients. And within TAPFIN, we’ve been shifting our investments to develop this knowledge in to the wisdom and strategic guidance we know our clients need. One of the tools we’ve developed is our Contingent Workforce Index, which ranks 75 countries across a number of relevant conditions for contingent workforce engagement. And soon we will be launching our new Global Insights knowledge portal, providing insights into market conditions, regulations, and more. It’s our way of harnessing Big Data and using it to help our clients meet their business goals. I suspect other companies will need to do the same thing if our industry is to evolve and stay out in front of our clients’ needs.
Leading businesses do not gamble with their global talent strategy. They research, analyze and prepare meticulously. Saving both time and resources can improve their offering, speed up processes and reduce one aspect of uncertainty. And in the face of certain uncertainty, even a slight reduction will make a huge difference.
NOTE: More information about the Contingent Workforce Index and the new Global Insights knowledge portal can be found at www.tapfin.com.